Top equities fund managers share common ground

Australian equities fund managers that held consumer discretionary, information technology and energy stocks boasted the best performing investment strategies last month, as the average manager beat the index by 2.5 per cent for the year to February.

Bennelong Concentrated Equities, Hyperion Australian Growth and Perpetual’s Wholesale Share-Plus funds were the top three performing long-only equities investment strategies for the year, after returning in excess of 22 per cent respectively.

Bennelong’s fund, which is managed by portfolio managers Mark East and Paul Cuddy, raked in 25.2 per cent for investors.

The fund’s portfolio is currently overweight in leisure, retail, healthcare and diversified financial stocks.

In its market outlook, Bennlong said investors would be encouraged by positive earnings momentum that followed the interim profit results season.

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But the fund manager also cautioned that there was a divergence in quality of stocks.

“The market continues to reward high-quality companies that are able to deliver growth in revenues, profit and cash flow, while being cautious on companies that cannot translate profits into cash flow," the fund manager said.

Some of the best contributing companies to the fund include recruitment website
SEEK
, online real estate business
REA Group
and
Domino’s Pizza Enterprises
. Tim Samway, managing director of Hyperion Asset Management, said exposure to “high-quality businesses" in the technology sector and businesses leveraged to the equities market helped boost Hyperion Australian Growth fund’s returns of 22.1 per cent for the year to February.

Companies such as REA Group,
Carsales
and
Platinum Asset Management
numbered among the key contributors to the fund’s gains.

Solid businesses

“The outlook from here is we’re still in a pretty low-growth environment, so we think investors will still be looking for solid businesses that can deliver," Mr Samway said.

“Fund managers such as Henderson Group, Macquarie . . . they have exposure to the [rising] equities market, and that would also help," he said.

Mercer’s monthly survey found banking giant
Westpac
, mining behemoth
BHP Billiton
and
ANZ
were the largest contributors to the index during February.

The most significant detractors from the performance of the index included telecommunications group
Telstra
,
Amcor
and
Asciano
.

“Australian equities rebounded strongly in February with the broad index rising by 4.9 per cent," according to the Mercer report.

“Strong returns were seen across the market capitalisation spectrum – with large caps returning 4.7 per cent, mid caps rising 7 per cent and small caps gaining 5 per cent."

The median Australian shares fund manager underperformed the S&P/ASX 300 index by 0.1 per cent over three months to February, and outperformed the benchmark by 1.4 per cent over three years.